Chinese Company Huawei Dominates Cuban Cellphone Market

14ymedio, Marcelo Hernandez, Havana, 23 March 2017 — The mobile
telephone market is changing at a speed that leaves little time to get
used to new models. In Cuba, this dynamism is mostly seen in the
informal networks, where the Chinese brand dominates because of its low
prices and the preference it receives from the government.

Since 2008, when Raúl Castro’s government authorized Cubans to have a
mobile phone contract, the number of customers with mobile lines has
skyrocketed. At the end of 2016, the Telecommunications Company of Cuba
(ETECSA) had more than 4 million subscribers to its cellphone service.

However, the sale of the handsets in the state network fails to satisfy
users, who complain of outdated models and high prices. To alleviate
this situation, the black market is greatly supported by those who want
to update their telephone technology.

ETECSA’s offices sell Huawei Y3s and Huawei Y520s for 80 and 85 Cuban
convertible pesos (CUC) respectively. Catalogued as low-end terminals
with limited features, these devices are an option for those who can’t
afford more complex models such as Huawei P7, which the company sells
for a whopping 472 CUC (roughly the same in dollars — about two years’
average salary in Cuba).

“I use it to connect to wifi and make videocalls with IMO,” Havier
Morales, a technology student who owns a Y520 told 14ymedio. The young
man emphasizes that the front facing camera, which is the one that is
most used to talk with this application, is not very good quality, “but
for the rest it’s an all-terrain phone.”

In the ETECSA office located in the Miramar Trade Center complex, an
employee who preferred to remain anonymous offered more details. “We
sell a lot of these models to teenagers who can’t afford a more
expensive device and also to people who want to use it to connect to the internet,” she says.

The employee acknowledges that “the competition is tough, because street
prices for mobile devices have dropped a lot,” and informal sellers
frequently offer their merchandise outside the office. “They sell phones
with cases, extra batteries and high-capacity micro-SD cards, so they
have more attractive offerings than we do.”

Huawei holds 17.2% of the Chinese market and is now the leading mobile
producer in that country. Outside its borders, for example in Spain,
where in 2016 the Chinese company provided 21% of the smartphones sold
in that country, the company has been very successful.

In late 2015, the company founded by Ren Zhengfei, who worked as an
engineer in the Chinese Army, signed an agreement with the Cuban state
monopoly to market smartphones on the island and to improve voice and
data services. The agreement includes the purchase of “parts, pieces and
technical training,” according to a report at the time from the Cuban
News Agency.

In 2000, Huawei obtained a contract to install the national fiber optic
network. The Chinese company’s equipment is also used in
wifi hotspots and in the newly opened Nauta Home service that provides
internet access from homes.

The presence of Huawei on the island goes back more than fifteen years,
according to Javier Villariño Ordoñez, sales director for the Chinese
firm. In its relationship with state entities, it emphasizes
“negotiating on the basis of mutual protection,” the businessman told
the national press.

Official media has widely covered the company’s presence, while they
have ironed out the scandal that enveloped the firm for some months
because of a security hole in its code that sent client information to China. The problem was detected in other very popular brands in Cuba,
such as ZTE and BLU.

The Washington-based human rights organization Freedom House has
followed a number of allegations about the close ties between Huawei and
state power in China and warns that security and human rights issues
have been linked to the business.

In an open letter from Miami addressed to ETECSA, the Foundation for
Human Rights in Cuba stated its disagreement with the agreements between
Havana and Huawei, a firm that “has a long history of supporting closed
societies by improving the ability of your government to censor the
Internet. ”

In the middle of last year, it was learned that US authorities were
investigating Huawei for its business in Cuba, Iran, North Korea, Sudan
and Syria. Its Chinese competitor, the telecommunications company ZTE
had already been sanctioned for the same reason and fined 1.2 billion
dollars.

However, the brand continues its expansion in the Cuban market. “Before
we sold more Samsung but now a lot of customers prefer BLU or Huawei,”
Rosa Ileana, an informal seller who sells smartphones from Panama and
the United States, told 14ymedio. “Three out of four phones I sell are
Chinese brands,” she says.

Her most frequent clients are “young people in high school,” but she
also says that recently her products have been sold to “many older
people who want to video-chat with relatives abroad,” from the wifi
zones on the island.

The preferences are “a question of prices” but also because “as more
people get a Huawei others also want to have one,” explains the seller.
“A lot of it is word of mouth, if a device is recommended to you because
of a long-lasting battery, stability and durability, then it’s more
likely you’ll reach into your pocket and buy it.”

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